JPM taking losses speculating on derivatives.

[Hugo Drax]

They are reporting big Mark to Mark losses today from derivative positions that are doing poorly. They also got downgraded.

Looks like JPM still playing. This is why Banks should not be playing at the craps table.

They got bailed out. Will they get bailed out again if they get hit with a liquidity crunch when they begin getting collateral calls?


http://www.cnbc.com/id/47377555

From WSJ

"J.P. Morgan Chase & Co. has taken $2 billion in trading losses in the past six weeks and could face an additional $1 billion in second-quarter losses due to market volatility, Chief Executive James Dimon said Thursday in a hastily arranged conference call after the market closed."



http://blogs.wsj.com/deals/2012/05/10/j-p-morgan-to-host-surprise-conference-call/


Dimon: "I understand fully why you, or anyone else, would question us generally."

<LI id=entry_46 class=postitem-liveBlog className="postitem-liveBlog">

• 5:25 pm
• by David Benoit
• Add a Comment

Dimon might be getting more combative. Mike Mayo just asked him what, in hindsight, he should have watched more closely. "Trading losses," Dimon deadpans. Then adds "newspapers."

<LI id=entry_47 class=postitem-liveBlog className="postitem-liveBlog">

• 5:26 pm
• by Stephen Grocer
• Add a Comment

Dimon: I am not sure how many times I can say this. It was a bad strategy, executed poorly.

<LI id=entry_48 class=postitem-liveBlog className="postitem-liveBlog">

• 5:29 pm
• by David Benoit
• Add a Comment

Dimon explains the CIO strategy's idea: "It has been on for a long time, it actually did quite well...it was there to deliver a positive result in a credit-stressed environment."

 

[Dulanic]

What do they have to lose right? Free market baby... if they hit it big and make big bucks taking these risks, the CEO gets fat ass bonuses. If they lose it all and go bankrupt... oh well... the CEO still made millions and millions. Win win for the execs right?

It's what's wrong with the market today. Short term gains >>>>>> Long term viability because that's what gets the big guys the bigger checks.

 

[senseamp]

Need to reinstate Glass-Steagall so we don't have to have FDIC rescue Chase if JPM makes some bad bets.

 

[Dulanic]

Need to reinstate Glass-Steagall so we don't have to have FDIC rescue Chase if JPM makes some bad bets.

^ This. It will never happen unfortunately. Though unfortunately, with how world wide companies have become... I don't know that it would have the same impact it used to have.

 

[mshan]

Is that guy based in London?

London always seems to be Ground Zero for these financial blow-ups (e. g. Lehman and AIG's London offices?) and always seems that they were exploiting some loophole in financial regulation that London allows but may not be allowed in NYC.

 

[senseamp]

^ This. It will never happen unfortunately. Though unfortunately, with how world wide companies have become... I don't know that it would have the same impact it used to have.

It probably will happen, but only after we have to bail out the banks again.

 

[postmortemIA]

derivatives = betting with somebody else's money. loss shall teach them lesson. even non-prime market is not this bad. there at least some people get loans which they wouldn't get at all.

 

[Dari]

Ahhh, I remember reading about this last month, and first hearing about it last year. Good thing I did what I did...

http://www.bloomberg.com/news/2012-04-12/jpmorgan-s-london-whale-could-use-new-nickname.html

http://www.bloomberg.com/news/2012-...ksil-fuels-prop-trading-debate-with-bets.html

 

[werepossum]

Need to reinstate Glass-Steagall so we don't have to have FDIC rescue Chase if JPM makes some bad bets.

This. And enforce it.

 

[phillyTIM]

....(sorry, removed)

 

[phillyTIM]

Damn straight - enforce Glass-Steagall. NOW.

Wall Street hasn't learned a THING since our taxpaying money bailed them out. Wall Street has danced away and is prancing on all of our money while they hamper our economy and well-being.

It will only take a movement, a real movement (perhaps beginning with a real strong petition signed by millions of us), to make our politicians take notice and hear our voice to re-instate the proper regulations on the financial industry.

Hopefully (I hate to say that) this will begin the real downfall of JP Morgan (and hopefully that cesspool Goldman Sachs & others) that will be the real #ss-kick that Wall Street & our paid-off Government needs.

 

[Craig234]

One more lesson in why to vote for progressive, the only group who represent the people against these powerful interests.

 

[nehalem256]

One more lesson in why to vote for progressive, the only group who represent the people against these powerful interests.

You mean we should vote for the group, where a majority of the members voted to bail out the bankers? :hmm:

 

[nehalem256]

What do they have to lose right? Free market baby... if they hit it big and make big bucks taking these risks, the CEO gets fat ass bonuses. If they lose it all and go bankrupt... oh well... the CEO still made millions and millions. Win win for the execs right?

It's what's wrong with the market today. Short term gains >>>>>> Long term viability because that's what gets the big guys the bigger checks.

We are far too soft in America. In singapore if a teenager spray paints a car he gets caned. In america you cause billions of dollars in damages and you walk away a millionaire :hmm:

 

[Craig234]

You mean we should vote for the group, where a majority of the members voted to bail out the bankers? :hmm:

The TARP bailout was the less important issue - the issue was the lack of regulation of the financial industry in the first place that led to the threatened crash of the system.

By the time it got to that point, the threat from the banks failing was understood to be huge to the world. Remember, they were voting for a Bush initiative reluctantly.

What is needed is what the progressives are the only group that will do, to represent the public against these powerful interests in prohibting their abusive practices.

 

[momeNt]

End the fed. Fix America.

Ron Paul.

 

[Craig234]

End the fed. Fix America.

Ron Paul.

Yes, an unchained plutoracy where the bankers have no rules at all.

That's the answer!

 

[momeNt]

Yes, an unchained plutoracy where the bankers have no rules at all.

That's the answer!

Man is born free, but he is everywhere in chains.

What's better is to give a group of economists and bankers complete control over our monetary system. It's worked out so well!

 

[Craig234]

Man is born free, but he is everywhere in chains.

What's better is to give a group of economists and bankers complete control over our monetary system. It's worked out so well!

Except that's just what Paul would do - directly, without the Fed.

 

[momeNt]

Except that's just what Paul would do - directly, without the Fed.

That's just false, complete deregulation would result in immediate failures of bad banking practices and we would be left with the best form of banking, full reserve commodity backed banking.

 

[Craig234]

That's just false, complete deregulation would result in immediate failures of bad banking practices and we would be left with the best form of banking, full reserve commodity backed banking.

No, that's just false - who do you think enforces recerve requirements, for example?

And other regulations put in place since FDR limiting the problems they can cause?

What do you think a major contributing factor the risk is - the industry Paul would let do what it wants creating a phony, secondary 'insurance' system of credit default swaps.

Unregulated, of course. Paul would be a return to the constant crashes pre-Fed.

 

[LegendKiller]

No, that's just false - who do you think enforces recerve requirements, for example?

And other regulations put in place since FDR limiting the problems they can cause?

What do you think a major contributing factor the risk is - the industry Paul would let do what it wants creating a phony, secondary 'insurance' system of credit default swaps.

Unregulated, of course. Paul would be a return to the constant crashes pre-Fed.

Libertopians blame everything on fractional reserve lending. As if full reserve lending is the most efficient way to make banking "work". They bandy about all sorts of stupid sayings like "fractional reserve banking is fraud" or whatever. When it comes down to it, people know what their deposits are being used for and it's not fraud, theft, or anything else. 100% reserve banking is inefficient and stupid.

As far as JPM goes, they weren't speculating per se, they were actually trying to hedge their credit risk, they just seemed to have managed it poorly.

 

[conehead433]

What a bunch of dumb asses. The CIO will still get ~ 10 million in bonuses.

 

[momeNt]

No, that's just false - who do you think enforces recerve requirements, for example?

And other regulations put in place since FDR limiting the problems they can cause?

What do you think a major contributing factor the risk is - the industry Paul would let do what it wants creating a phony, secondary 'insurance' system of credit default swaps.

Unregulated, of course. Paul would be a return to the constant crashes pre-Fed.

Withdrawals would enforce reserve requirements, as well as competing backs going after physical specie.

Please tell me who in their right minds would accept unbacked noted in a free banking system. No bank would that's for sure, they'd go after the physical specie and any bank issuing unbacked notes would be insolvent. Problem solved.

But keep thinking government is in your side. Where there is a government powerful enough to enforce banking rules, you can assume it's also corrupt enough to be bought by banks.

 

[momeNt]

Libertopians blame everything on fractional reserve lending. As if full reserve lending is the most efficient way to make banking "work". They bandy about all sorts of stupid sayings like "fractional reserve banking is fraud" or whatever. When it comes down to it, people know what their deposits are being used for and it's not fraud, theft, or anything else. 100% reserve banking is inefficient and stupid.

As far as JPM goes, they weren't speculating per se, they were actually trying to hedge their credit risk, they just seemed to have managed it poorly.

It has nothing to do with people knowing where their deposits are going. It has everything to do with the notion that keeps being perpetuated by establishment economics that a free market is not able to turn savings into investments properly so banks become the intermediary for channeling savings into investments.